What I soak up from the flow of information on the web. Shooting the breeze on the language of forms against the technology landscape. Discussing what matters in my little world!

January 17, 2011

Social graph a monster trend

Image via WikipediaIn light of the new investment in Facebook valuing it at $50B, and then Groupon raising a round of $950M and going IPO next year with a value of $15B, can we really say that this is not serious business? In other words, this is not your kid's game anymore. Groupon has been around for less than two years after all and Google wanted to buy it for about $6B as the press reported a couple of weeks ago.

The next battle royale is the social graph in my mind. Every day that goes by, Google is chasing an ever bigger Facebook. Every day that goes by, the amount of information that Google can't search is growing because Facebook's wall garden is getting bigger. Google is losing precious time. No wonder Google is uptight with Facebook; it's actually threatening the cash cow. A company may have actually found a way to stop Google in its tracks. Google so far has had the whole playing field to itself, and then some. Google has been able to render obsolete all of Microsoft's desktop software offering, and it is still at it and all that for free because it makes money from advertising. With Facebook now it's a different story. Facebook is not even going at the speed limit and it already has Google worried; I can't imagine what flooring the pedal will mean.

The social graph is worth gold because it reduces the transaction friction for getting people to buy. In some cases and for some items, people will buy on an impulse because their friends just did. Call it peer pressure or peer influence, it doesn't matter; merchants sell more and advertising gets more impressions.

It just hit me sitting on the couch just now. I was watching an internet show and I liked it, so I told my friends on Facebook I did. Next thing I know, 4-5 people liked the thing back. This means the ads on this show just got that many more impressions. Buying takes many forms so it seems. How can Google go after that? Facebook is about experiencing life and sharing that experience. Google is about figuring out what to search for.

Facebook will have a huge influence on our TV watching habits. Soon all TV's will have a broadband cable plugged in the back and the advertisers will love it! At this time, this is Facebook's game. This is one reason why Google is trying to get ahead by developing their own GoogleTV, so they can get access to that revenue stream of experience sharing and influence.

I see Facebook as a platform that runs only a few apps right now mainly from Zinga. It is the social graph platform for nonbusiness stuff. I believe a lot more applications that are a lot more serious than gaming will tap the power of Facebook. There are many more verticals to go! Facebook will make a huge pile of money on those ads it serves. The targeting it has because of the information it has on you is unparalleled. Once it hits you, and you bite, Facebook will broadcast it to your friends and they will bite too because you did.

We haven't scratched the tip of the iceberg yet on the social graph. Facebook hasn't anyway. And you can trust Facebook to be trying and trying. I like Zuckerberg's quote that expresses very well what Facebook is doing these days and his attitude towards screwing up once in a while: "If you are building a product that people love you can make a lot of mistakes".